Global equities rally as easing Middle East tensions lift risk appetite

Market Commentary

Global markets rallied on Wednesday as signs of potential de-escalation in the Middle East boosted risk appetite and pushed energy prices lower. Reports that Iran was considering a US-backed memorandum aimed at ending the conflict and restoring trade flows through the Strait of Hormuz drove a sharp decline in oil and natural gas prices, improving the outlook for corporate margins and easing concerns over persistent inflation and higher interest rates.

European equities led the advance, with the STOXX 50 climbing 2.60% and the STOXX Europe 600 rising 2.30%. Lower power prices lifted industrial heavyweights, including Airbus, Schneider Electric, Siemens and Safran, while ASML Holding jumped 6.20% after strong results from AMD boosted sentiment around chipmakers. Softer sovereign bond yields also supported banks and luxury stocks, while Novo Nordisk and AXA gained on upbeat guidance and earnings, respectively.

The positive momentum extended to Wall Street, where easing geopolitical tensions and resilient corporate earnings continued to underpin sentiment. While US stock futures were subdued, reports suggested Washington and Tehran were nearing a 14-point memorandum of understanding that could reopen the Strait of Hormuz and lay the groundwork for broader nuclear negotiations, although President Donald Trump warned military action could resume if Iran failed to comply. The S&P 500 rose 1.46%, the Nasdaq Composite surged 2.02%, and the Dow Jones Industrial Average gained 1.24%, led by industrials, technology and communication services as AI-linked companies remained central to the rally.

Asian markets followed suit, with Chinese equities advancing sharply as investors returned from an extended holiday break and rotated into technology shares. The Shanghai Composite rose 1.17% to a two-month high, while the Shenzhen Component climbed 2.33% to its strongest level since February 2021. Technology names including Hygon Information Technology, Cambricon Technologies, Zhongji Innolight and NAURA Technology Group advanced as the AI-driven rally across Asia gathered pace. Economic data also provided support, with China’s composite PMI rising to 53.1 in April from 51.5 in March, reflecting stronger manufacturing and services activity.

South African markets also closed firmly higher, tracking the global risk-on tone. The FTSE/JSE All Share Index surged to 119 166 points, while the FTSE/JSE Top 40 went up to 111 222. Precious metals and mining stocks led the rally, with the sector climbing 7.93% and basic materials advancing 6.31%, while the rand traded around R16.37/USD for most of the session.

In commodities, Brent crude fell to $102.17/bbl as easing geopolitical risks reduced concerns over supply disruptions and tempered expectations for prolonged restrictive monetary policy. In contrast, spot gold rose 2.85% to $4 695/oz, reflecting continued safe-haven demand despite the improvement in broader market sentiment.